THIS AGREEMENT ("Agreement") is made and entered into as of the 18th day
of October, 1996 by and among TEARDROP GOLF COMPANY, a Delaware Corporation
(the "Company"), TEARDROP PUTTER CORPORATION, a South Carolina corporation
("TPC"), XXXX X. XXXXXXX, 00 Xxxxxxxx Xxxxx, Xxxxx Xxxxxx, Xxx Xxxxxx 00000
("Slucker"), XXXX X. XXXXXXX, 00 Xxxxx Xxxx, Xxxxxx Xxxx Xxxxxx, Xxxxx
Xxxxxxxx 00000 ("Xxxxxxx"), XXXXX XXXXX, c/o Xxxxxxxx-Xxxxxxxx SynerMed,
Xxxxx 000, Xxxxxxx Xxxx, Xxxxxxx, Xxx Xxxxxx 00000 ("Grace"), XXXXXXX
XXXXXXX, c/o Xxxxxxxx-Xxxxxxxx SynerMed, Xxxxx 000, Xxxxxxx Xxxx, Xxxxxxx,
Xxx Xxxxxx 00000 ("Xxxxxxx"), and XXXX XXXXXXXX, c/o Xxxxxxxx-Xxxxxxxx
SynerMed, Xxxxx 000, Xxxxxxx Xxxx, Xxxxxxx, Xxx Xxxxxx 00000 ("Xxxxxxxx")
(Slucker, Xxxxxxx, Xxxxx, Xxxxxxx and Xxxxxxxx hereinafter may individually
be referred to as a "Transferor" and collectively referred to as the
"Transferors").
RECITALS
WHEREAS, TPC was formed under the laws of the State of South Carolina on
August 24, 1992;
WHEREAS, pursuant to the Shareholders Agreement dated October 1, 1992, as
amended by the amendment dated March 13, 1994 and the second amendment dated
December 31, 1994, and certain other agreements among the shareholders of TPC,
including, but not limited to the letter agreement dated April 16, 1996 (the
"Shareholder Agreements"), TPC and the shareholders of TPC set forth their
agreement regarding the organization and management of TPC and the disposition
of shares of stock of TPC;
WHEREAS, TPC has determined, in its business judgment, that it should
terminate the Shareholder Agreements, pursuant to the terms and conditions of
this Agreement;
WHEREAS, TPC and Slucker, Xxxxxxx, Xxxxx, Xxxxxxx and Xxxxxxxx, as owners
of all of the issued and outstanding stock of TPC, desire to terminate the
Shareholder Agreements pursuant to the terms and conditions of this Agreement;
WHEREAS, from time-to-time Slucker, Xxxxxxx, Xxxxx, Xxxxxxx and Xxxxxxxx
have extended loans to TPC, which, with accrued interest through September
30, 1996, aggregate amounts due at September 30, 1996 are set forth in
Schedule I;
WHEREAS, the Company was formed under the laws of the State of Delaware on
September 18, 1996;
WHEREAS, pursuant to that certain Agreement and Plan of Merger dated as
of October 21, 1996, by and among the Company and TPC (the "Merger Agreement"),
the shares of TPC's issued and outstanding common stock will be converted and
exchangeable for 750,000 shares of the Company's common stock;
WHEREAS, pursuant to the Merger Agreement, TPC will be merged into the
Company and the Company will, as a matter of law, assume all debts,
liabilities and obligations of TPC;
WHEREAS, Slucker, Xxxxxxx, Xxxxx, Xxxxxxx and Xxxxxxxx have agreed to
contribute certain debt owed to them by the Company, the particular amounts of
which are set forth opposite their names on Schedule II attached hereto (the
"Contributed Debt");
WHEREAS, Slucker, Xxxxxxx, Xxxxx, Xxxxxxx and Xxxxxxxx have agreed to
extend the payment of certain debt owed to them by TPC pursuant to certain notes
to be issued by the Company which are identified on Schedule III attached hereto
(the "Notes"); and
WHEREAS, the Transferors desire to contribute the Contributed Debt to the
Company, as successor to TPC, and the Company, as successor to TPC, desires to
accept such contribution and issue the Notes, on the terms and conditions set
forth in this Agreement; and
WHEREAS, Transferors, TPC and the Company hereby acknowledge and agree that
it is their intention that (i) the transactions contemplated hereby will close
simultaneously with the effectiveness of the Company's registration statement on
Form SB-2 (the "Registration Statement"), as determined by the United States
Securities and Exchange Commission (the "Effective Date") and (ii) that the
closing of the transactions contemplated hereby be treated as an integrated
unitary transaction between the parties hereto and one plan of formation for the
Company under Section 351 of the Internal Revenue Code of 1986, as amended.
NOW THEREFORE, in consideration of the premises and the mutual agreements
hereinafter set forth, the parties agree as follows:
ARTICLE 1
TERMINATION OF SHAREHOLDER AGREEMENTS
1.1. The Shareholder Agreements and any and all agreements and
understandings, written or oral, by and between TPC and the shareholders of TPC
prior to this Agreement will be terminated and be of no further force and
effect, without further action by the parties thereto as of and on the Effective
Date.
1.2. TPC hereby represents and warrants that it has the requisite power
and authority to enter into this Agreement.
1.3. Each of the parties by execution hereof waives any rights that such
party may have under the Shareholder Agreements in connection with the sale of
stock by the Company to Xxxx Xxxxxxx in April 1996 and from Xxxx Xxxxxxx to Xxxx
Xxxxxxx at such time.
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ARTICLE 2
CONTRIBUTION
2.1 CONTRIBUTION OF DEBT. At the Effective Date, Slucker, Xxxxxxx,
Xxxxx, Xxxxxxx and Xxxxxxxx shall contribute to the Company, as successor to
TPC, and cancel, release and forgive the amount of Contributed Debt and all
additional interest theron from September 30, 1996 through the Effective Date
set forth opposite their name on Schedule II hereto for no additional
consideration and without any further action by them, TPC or the Company.
2.2 POSSESSION OF INSTRUMENTS. Upon the execution of this Agreement,
each Transferor shall tender to the Company to hold in escrow until the
Effective Date, all promissory notes or other documentation representing the
Contributed Debt.
2.3 ISSUANCE OF ADDITIONAL DEBT. At the Effective Date, and as a
condition to the foregiveness of the Contributed Debt, the Company will
execute and deliver to each Transferer the respective Notes listed on Schedule
III.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF EACH TRANSFEROR
To induce the Company to accept the Contributed Debt, each Transferor
hereby represents and warrants to the Company, severally and not jointly, as set
forth in Sections 3.1 through 3.6 hereof as follows:
3.1 AUTHORITY. Each Transferor has the requisite power and authority to
execute and deliver this Agreement and to perform his obligations hereunder.
3.2 BINDING EFFECT. This Agreement has been duly executed and delivered
by each Transferor and constitutes the legal, valid and binding obligation of
each such Transferor, enforceable against the Transferors in accordance with its
terms, except to the extent that enforceability may be limited by applicable
bankruptcy, insolvency or similar laws affecting the enforcement of creditors'
rights generally and subject to general principles of equity.
3.3 NO CONFLICT. Neither the execution and delivery of this Agreement
by the Transferors nor the performance of obligations hereunder will conflict
with or result in a breach of any of the provisions of, or constitute a default
under any material agreement or any mortgage, indenture, lease, contract or
other instrument to which any such Transferor is a party or by which a
Transferor is bound, or require the consent, approval or authorization of any
person, entity or governmental authority, or result in the violation of any law
to which a Transferor is subject.
3.4 OUTSTANDING DEBT. Slucker, Xxxxxxx, Xxxxx, Xxxxxxx and Xxxxxxxx
represent and warrant that there is no other debt owed to them individually
or collectively, other than the loans described in Schedule I and, as of the
Effective Date, the only indebtedness of the Company to each of them will be
represented by the Respective Notes as
described in Schedule III.
3.5 LOCK-UP LETTER. Each Transferor agrees to execute and deliver
the lock up letter (the "Lock-Up Letter") attached hereto as Exhibit A in
connection with the Company's initial public offering.
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3.6 FURTHER ACTION. Each of the parties hereto further agree to use all
reasonable efforts to take, or cause to be taken, all action and to do, or cause
to be done, all things necessary, proper or advisable as soon as practical to
consummate and effectuate the transactions contemplated by this Agreement or as
requested by the Underwriter of the Company's initial public offering to
complete such initial public offering.
ARTICLE 4
ADDITIONAL COVENANTS, AGREEMENTS AND ACKNOWLEDGMENTS
4.1 BINDING EFFECT. The covenants, conditions and agreements contained
in this Agreement shall bind, and the benefits hereof shall inure to, the
parties hereto and their respective heirs, executors, administrators, successors
and assigns.
4.2 AMENDMENTS. This Agreement may be amended, modified, changed or
terminated only by an agreement in writing signed by all the parties hereto.
4.3 REPRESENTATION BY COUNSEL. Each Transferor understands and
acknowledges that the Company has been represented by the law firm of Crummy,
Del Deo, Dolan, Griffinger & Xxxxxxxxx, a professional corporation ("CDDG&V") in
connection with this Agreement, the Registration Statement and other matters.
Each Transferor acknowledges that CDDG&V has not been engaged to represent and
is not representing any Transferor in connection with the contribution to the
Company of the Contributed Debt. Each Transferor acknowledges that he will, at
his own discretion, obtain independent legal representation in connection with
the transactions contemplated hereby.
4.4 CAPTIONS. The captions preceding the text of the sections of this
Agreement are used solely for the convenience of reference and shall not affect
the meaning or construction of this Agreement.
4.5 WAIVER OF JURY TRIAL. In any litigation arising out of or relating
to any of the matters contained in this Agreement, the parties hereto waive
trial by jury.
4.6 NEW JERSEY LAW GOVERNS. This Agreement shall be governed and
construed in accordance with the laws of the State of New Jersey.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
TEARDROP GOLF COMPANY
By: _________________________
Name: Xxxx X. Xxxxxxx
Title: President
TEARDROP PUTTER CORPORATION
By:
---------------------
Xxxxx X. Xxxxxxx
President
--------------------
XXXX X. XXXXXXX
--------------------
XXXX X. XXXXXXX
--------------------
XXXXXXX XXXXXXX
----------------
XXXXX XXXXX
------------------
XXXX XXXXXXXX
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SCHEDULE I
Amount of
Principal and Interest
NAME Outstanding at September 30, 1996
---- ---------------------------------
Xxxx X. Xxxxxxx $742,276
Xxxx X. Xxxxxxx $406,348
Xxxxx Xxxxx $263,856
Xxxxxxx Xxxxxxx $257,188
Xxxx Xxxxxxxx $44,192
-------------
Total $1,714,000
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SCHEDULE II
DEBT TO BE CONTRIBUTED
NAME (outstanding amount as of September 30, 1996
---- ----------------
Xxxx X. Xxxxxxx $171,742
Xxxx X. Xxxxxxx $376,348
Xxxxx Xxxxx $248,856
Xxxxxxx Xxxxxxx $244,688
Xxxx Xxxxxxxx $41,692
--------------
Total $1,083,326
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SCHEDULE III
Grid Note with a maximum principal amount of $300,000 dated as of August 1, 1996
issued by the Company to Xxxx X. Xxxxxxx
Promissory Note in the original principal amount of $400,000 dated as of
, 1996 issued by the Company to Xxxx X. Xxxxxxx
Promissory Note in the original principal amount of $40,000 dated as of
, 1996 issued by the Company to Xxxx X. Xxxxxxx
Promissory Note in the original principal amount of $30,000 dated as of
, 1996 issued by the Company to Xxxx X. Xxxxxxx
Promissory Note in the original principal amount of $15,000 dated as of
, 1996 issued by the Company to Xxxxx Xxxxx
Promissory Note in the original principal amount of $12,500 dated as of
, 1996 issued by the Company to Xxxxxxx Xxxxxxx
Promissory Note in the original principal amount of $2,500 dated as of
, 1996 issued by the Company to Xxxx Xxxxxxxx
0
Xxxxxxx , 0000
XXX Securities Corp.
00 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
The undersigned officer, director and/or stockholder of TearDrop Golf
Company, ("Company"), in consideration of the underwriting of a public
offering ("Offering") of securities of the Company by GKN Securities Corp.
("GKN"), hereby agrees that, without the prior written consent of GKN for a
period of 24 months from the effective date ("Effective Date") of the
Company's Registration Statement on Form SB-2 which relates to the Offering,
the undersigned will not offer, sell, transfer or otherwise dispose of any
shares of Common Stock of the Company now owned or hereafter acquired,
whether beneficially or of record, by the undersigned, including, but not
limited to shares of Common Stock acquired upon exercise of options or
warrants or acquired upon conversion of any other securities owned by the
undersigned (collectively, the "Shares"). Notwithstanding the foregoing, the
undersigned shall have the right to sell securities of the Company purchased
by the undersigned in the Offering or in the aftermarket at any time without
the consent of the Underwriter.
The undersigned also acknowledges and agrees that, during the five-year
period following the Effective Date, GKN shall have the right, but not the
obligation, to purchase for its account or to sell for the account of the
undersigned, any securities of the Company sold by the undersigned on the
open market. The undersigned agrees to consult with GKN with regard to any
such sales and will offer GKN the exclusive opportunity to purchase or sell
such securities on terms at least as favorable to the undersigned as the
undersigned can secure elsewhere. If GKN fails to accept such proposal for
sale by the undersigned within three hours after receipt of a written notice
containing such proposal, then GKN shall have no claim or right with respect
to any such sales contained in any such notice. If, thereafter, such proposal
is modified in any material respect, the undersigned shall follow the same
procedure as with respect to the original proposal.
The undersigned acknowledges that a manually signed copy of this
Agreement will be filed with the Pennsylvania Securities Commission as part
of the Company's registration filing and further, that the undersigned will
cause:
1. A copy of this Agreement to be available from the Company or
the Company's transfer agent upon request and without charge;
-------------
It is agreed that, for purposes of this letter, the undersigned
beneficially owns, among other shares, any shares owned by (i) members of
his family and (ii) any person or entity controlled by the undersigned
or under common control with the undersigned.
2. A notice to be placed on the face of each stock certificate
for Shares stating that the transfer of the Shares is
restricted in accordance with the conditions set forth on the
reverse side of the certificate; and
3. A typed legend to be placed on the reverse side of each stock
certificate representing Shares which states that the sale or
transfer of the Shares is subject to certain restrictions
pursuant to an agreement between the stockholder and GKN,
which agreement is on file with the Company and the stock
transfer agent from which a copy is available upon request and
without charge.
The terms and conditions contained in this Agreement can only be
modified (including premature termination of this Agreement) with the prior
written consent of GKN.
Very truly yours,
Signature:
------------------------------
Print Name:
------------------------------
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